Singapore maintained industrial site supply over weak demand

JTC put up 12.59 ha of industrial sites for its land sales programme.

JTC will sell 12.59 ha of land in six industrial sites under Confirmed List and seven industrial sites under Reserved List through the Industrial Government Land Sales (IGLS) programme. The amount has been similar to that of H1 in 2018.

Tay Huey Ying, JLL Singapore head of research & consultancy said the uplift in economic and manufacturing sector performances and signs of an imminent bottoming of the industrial property market have not prompted the government to up the IGLS supply.

“The government's measured approach for the 2H 2018 IGLS Programme could have stemmed partly from the waning interest observed for recent IGLS plots as this could suggest that demand for IGLS land has been more or less satisfied,” Tay said. “There is thus little justification for increasing the overall industrial land supply at this juncture.”

She noted that three out of six parcels on H1’s Confirmed List have failed to attract any bids. “For plots that garnered bids, those with tender closings from November 2017 have received only one to two bids, down from the typical three to five bids seen for IGLS sites during the most part of 2016 and 2017,” she added.

Colliers Singapore head of research Tricia Song noted that all sites offered are zoned for Business-2 use, compared to one zoned for Business-1 use in Braddell Road on the Reserve List for H1 2018 which was triggered and launched on 30 May 2018, with tender closing on 11 July.

“Overall industrial property activities have picked up but rents appear to remain soft due to ample supply in particular segments,” Song added.

According to Tay, Singapore could have also taken into consideration downside risks such as a potential escalation of a global trade war which is expected to have some dampening effect on the Singapore economy and the manufacturing sector performance.

“The successful triggering of one 30-year leasehold site on the 2H 2017 Reserve List and two similar plots on the 1H 2018 Reserve List for open tender also did not compel the Government to place any 30-year leasehold plots on the Confirmed List,” she added.

In order to cater to varying needs and potential strengthening in demand, the government has placed a slightly larger quantum of industrial space in terms of potential gross floor area in the Reserved List for industrialists or developers to trigger for tender in response to market demand, Tay said.

She noted that the seven plots on the Reserved List could yield a total gross floor area of 2.12 million sq ft, up 7.7% from the 1.97 million sq ft that the seven plots on the 1H 2018 Reserved List could generate.